NEW DELHI: Statistics ministry Saturday floated a discussion paper and invited views from experts, academicians, government bodies, states, financial institutions and other stakeholders on treatment of items distributed free of cost through PDS in the consumer price index compilation framework.The ministry is currently undertaking a revision of the CPI with the objective of updating item weights, revising the consumption basket and incorporating methodological improvements to strengthen the index. At present, the CPI is compiled every month on the basis of price data collection from 1,181 rural markets and 1,114 urban centres across the country. With the release of household consumption expenditure survey 2023-24, the ministry has also kicked off the exercise to revise the CPI base year from 2012 to 2024.

Including items distributed through the PDS in the retail inflation basket is a crucial issue as it could have a bearing on the actual headline inflation outcome. In the existing CPI series, items that are distributed free of cost do not carry any expenditure share, since households incur zero out-of-pocket spending on them. This is consistent with international practice, according to the discussion paper which asked stakeholders to send in their comments by Oct 22. The paper states CPI serves a dual purpose in India. It is not only the principal indicator for monetary policy formulation by RBI, but also widely used as a proxy for tracking changes in cost of living and for indexation of wages, pensions and formulation of social welfare schemes.